As employers are analyzing the new health care standards required by the Patient Protection and Affordable Care Act, they are increasingly turning to self-funded plans, according to a new report by Volk & Bell Benefits, a member firm of United Benefit Advisors.
PPACA includes provisions that include an employer mandate with unknown future costs, causing many employers to take another look at what they're spending on employee benefits.
Both cost-sharing and cost-shifting are customary strategies; however, self-funded health care was once an option only large employers considered. Now some small- and mid-sized employers are beginning to look at self-funded health care plans, the report finds.
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"Employers can realize some very significant advantages of self-funding over fully insured coverage," says Clair Volk, president of Volk & Bell Benefits. "Self-funding provides greater flexibility when choosing your plan design and better control over cost by avoiding community rating and creating more flexible and effective wellness programs."
Although self-funding is beneficial, employers should realize there will be changes in their plans. Cash flow, stop-loss insurance protection, annual discrimination testing and other administrative duties can produce a complex environment, the report reveals, and it may be wise to seek advice from a qualified advisor.
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